The primary digital asset, bitcoin (BTC), as soon as once more noticed heavy promoting on Monday, after information got here out on Sunday that the U.S. Federal Reserve (Fed) is taking emergency measures to mitigate the monetary devastation that’s at the moment occurring all over the world.
As introduced by the Ate up Sunday, the U.S. central financial institution is chopping rates of interest to the band between Zero and 0.25% – the bottom attainable with out going into detrimental territory. As well as, the controversial Quantitative Easing (QE) program can also be being re-introduced to pump extra liquidity into the monetary system, whereas reserve necessities for industrial banks are slashed to 0%.
In theory, extreme measures like the ones announced yesterday by the Fed should all be insanely bullish for a “hard” asset with limited supply such as bitcoin. In reality, however, the opposite has happened, and bitcoin – as well as the broader crypto market – is currently selling off along with the stock market.
As of press time on Monday (14:43 PM UTC), BTC was down 12% over the past 24 hours, trading at USD 4,722. Ethereum (ETH), meanwhile, was down 15% to a price of USD 107.
BTC price chart:
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Stock market indices on Monday:
However, crypto and stocks were not the only assets headed lower today, with even the traditional safe-haven gold being sold. So far, all central bank actions to try to limit the selling globally has been ineffective.
HOLY FREAKING SHIT!!! Markets open DOWN after biggest monetary bazooka shot in world history.
“The central banks threw the kitchen sink at it yesterday evening yet here we are (with deep falls in stock markets),” Societe Generale strategist Kit Juckes, told Reuters. “There is a great sense that central banks are going to get to grips with the issues of getting money flowing … But the human problem, the macro problem, there is nothing they can do about that.”
The current market action is being discussed among members of the community, with some once again questioning the narrative of whether bitcoin can be considered an uncorrelated asset.
This question was also raised by the economist and trader Alex Krüger, who noted that “Having to pay attention to what traditional assets and central banks do makes crypto an entirely different ballgame.”
Having to pay attention to what traditional assets and central banks do makes crypto an entirely different ballgame… https://t.co/ZBUStmr485
Further setting the tone for the discussions was Roy Sebag, founder of GoldMoney and a well-known crypto-skeptic, who proclaimed that “With U.S. dollar interest rates now officially at zero, today marks the end of the fiat dollar experiment which began in 1971. The path from this point to a gold standard is much shorter than most realize.”
Meanwhile, the discussion on what can be expected next from governments and central banks circled mainly around what can be done to avoid a complete economic meltdown, and what the consequences of those actions might be.
Among them, chief investment officer at crypto investment firm Arca, argued in a Twitter thread that “fiscal stimulus” – increased government spending – will most likely be announced in the near future.
1) First step is to save the banks, calm the markets, stop the panic selling — The Fed just issued what is basica… https://t.co/MuYFoJNIzs
And hopefully that production and normal real economic activity is something we see as soon as a couple of months from now. /End
Despite the recent bitcoin crash, however, leading members of the community remained optimistic about bitcoin’s potential during these uncertain economic times, with co-founder of Morgan Creek Digital, Anthony Pompliano, even going as far as calling The Fed’s measures “a USD 700 billion marketing campaign for Bitcoin.”
THEY ARE LITERALLY CUTTING RATES AND PRINTING MONEY RIGHT INTO THE BITCOIN HALVING.
Taking it one step further, Ryan Selkis, founder of Messari Crypto, urged his followers to “promote money, purchase bitcoin,” following yesterday’s unprecedented announcement from the Fed, whereas Tyler Winklevoss, Co-founder of crypto trade Gemini, referred to as bitcoin “a hedge” to Fed’s price cuts and cash printing.
Following down the identical path was additionally Jesse Powell, CEO of crypto trade Kraken, who jokingly requested his followers in the event that they knew the place he might get a few of these 0% curiosity loans. “Looks like time to leverage all laborious belongings to go lengthy BTC. Clearly, not monetary recommendation,” he wrote.
Nevertheless, not everyone seems to be satisfied that large authorities stimuli will instantly profit bitcoin. Amongst them was Tushar Jain, managing accomplice at crypto funding fund Multicoin Capital, who wrote:
“A variety of Bitcoiners are very excited in regards to the Fed’s latest price cuts and QE program. I see numerous claims about how that is good for Bitcoin’s worth. Can anybody clarify how the cash from QE truly makes it to Bitcoin?”
“Clearly some BTC merchants acquired enthusiastic about [quantitive easing] however the market couldn’t maintain the worth,” he went on so as to add.
The identical sentiment was additionally shared by Josh Rager, co-founder of buying and selling platform Blockroots, saying that the present inventory market meltdown “isn’t bullish for crypto markets in anyway,” whereas revealing that he has “moved extra crypto holdings to money” after it grew to become evident that central financial institution efforts weren’t going to avoid wasting the inventory market.
“We imagine this time is totally different and doubtlessly is way worse than the 2008 World Monetary Disaster. It might start as a worldwide financial disaster whereby the worldwide economic system experiences a sudden downturn because of a monetary disaster, impacting each single facet of our each day life,” in response to TokenInsight, a token information and score company.
“We imagine cryptocurrency like another asset class, is in an irrational stage. In mild of market-wide panic, the monetary mannequin and structured diversified methods may not be efficient. We imagine the market requires a interval to shake off the irrationality and return to a extra rational state,” they added.
Study extra: 10 Crypto Minds Weigh in On Put up-Crash Bitcoin and Its Future